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The current account deficit (CAD) continues to remain in the limelight, having risen to 2.4% of GDP in quarter ended June’18. While trade and invisibles forms one part of the balance of payment equation, the other part is called Capital flows (or financial flow). Capital flow helps finances the deficit in trade, in the absence … Continue reading Capital Inflows – FDI, FII and the Rest

The profitability of NBFCs is derived by charging higher rate of interest (up to a ceiling governed by RBI) which customers agree to pay since they have to meet less stringent norms and do not have access to any other source of capital. Further, NBFCs are not governed by regulatory requirement such as maintaining Statutory Liquidity Ratio (SLR) … Continue reading Understanding NBFCs (Part II)

The default by IL&FS and its group companies has brought NBFCs (Non Banking Finance Companies) into focus again. These companies do not deal with public money (probably the reason why they did not receive much attention so far) but play an important role in financial intermediation, both in terms of fund sourcing and deployment. NBFCs … Continue reading Understanding NBFCs (Non Banking Finance Companies) – I

The default by IL&FS and group companies in their debt obligation signals the spread of NPA mess beyond the banking space to aggregate financial services sector. Even though the default is a result of continued stress in the infrastructure sector, a highly leveraged balance sheet with consolidated liabilities of over Rs 1 lakh crore (FY18) … Continue reading IL&FS Default – Analysing the Crisis

Reliance Industries Ltd (RIL), the largest private sector company in the country recorded revenue of over Rs 4.3 lakh crore and net profit of Rs 36,000 crore in FY18 (consolidated). The company provides an interesting case study for management discussion and analysis. While it has done extremely well in its core business, it still has … Continue reading Corporate Analysis – Reliance Industries

The sign of the busting of bubble started to show from the middle of 2006 with the transition of loan from ‘interest only’ and ‘teaser rates’ to regular payments. This coupled with increase in market interest rate led to doubling or even tripling of monthly repayments. Unable to pay the increased monthly repayments, borrowers began defaulting … Continue reading Subprime Crisis – Part II

The subprime crisis has caught the global attention again, today marking the collapse of Lehman Brothers, ten years ago. The crisis remains a classic case study for the enormity and swiftness with which it unfolded. A brief attempt to revisit and simplify the complex issues involved.. The genesis of the issue, paradoxically, lies in another … Continue reading Subprime Crisis – Ten Years On.. Part I

The amalgamation of Bank of Baroda, Vijaya Bank and Dena Bank announced yesterday comes more than a year after the last successful merger in the PSB space. The amalgamation involves merger of two PSBs having less than 2% market share with another mid-sized bank to create the country’s second largest public sector bank. However, there … Continue reading Analyzing Amalgamation of BoB, Vijaya Bank & Dena Bank

The decision of National Company Law Appellate Tribunal (NCLAT) earlier this month to accept the bid of Numetal and conditional acceptance of bid by ArcelorMittal for sale of Essar Steel is one of many and not yet the last of interesting twists & turns to the saga. The insolvency process, which began in June last … Continue reading The Curious Case of Essar Steel Insolvency..!

The tariff hike on some of the Chinese goods by US government has shown that Mr Donald Trump is serious about what he talked about during his election campaign. Even though he has been facing severe criticism for his protectionist trade policies, his point of view with regard to China needs to be understood properly. A brief … Continue reading US China Trade War – Understanding the Dynamics